In: Operations Management
I have a project planned to be completed in 6 months with a budget of 60,000. after three months 30,000 spends which is 50% of the budget is spend.
Use earned value management to calculate:
A) cost performance index (CPI)
B)Schedule performance index (SPI)
C)estimate at completion (EAC).
As per the case scenario:
Planned timeline of project= 6months
Planned budget for 6months =$60,000
Earned Value is the task amount actually completed.
So, after 3 months,50% is completed then EV= percentage complete (Actual)* Task budget
= 60,000*50%= 60,000/2= $30,000
Planned value is the task amount supposed to be completed
So, after 3months 50% is completed then PV= Percentage complete (Planned)*Task budget
= 60,000*50%= 60,000/2= $30,000
Actual cost is the actual today cost of the task (AC)= $30,000 is spent after 3months
SPI (Schedule performance index) =EV/PV= 30,000/30,000= 1
If SPI =1 the task is on schedule
CPI (Cost performance index) = EV/AC= 30,000/30,000 =1
If CPI= 1 the task is on budget
EAC (Estimate at completion)= Budget at completion (BAC)/CPI
Budget at completion is $60,000
= 60,000/1= $60,000
So, as per the above analysis, the project schedule is on time and on budget with no extra costs added to finish the project.